A survey recently released by the Associated General Contractors of America and data from construction technology firm Procore indicate that construction activity is returning to pre-coronavirus levels in many parts of the country, and some firms are adding workers. However, according to the report, the new economic data also shows some future projects are being canceled and many others are being delayed by supply chain issues and labor shortages, underscoring the need for additional federal recovery measures, association officials note.
“Many of the immediate economic impacts of the coronavirus have passed and, as a result, activity and hiring are up, a bit,” said Ken Simonson, the association’s chief economist. “But while the immediate crisis appears to have passed, we are just now beginning to appreciate some of the longer-term impacts of the pandemic on the industry.”
Construction activity has returned to pre-coronavirus levels in 34 states, based on data on workers’ hours analyzed by Procore. Meanwhile, the association’s survey found that only 8% of construction firms were forced to furlough or lay off workers in June while 21% reported adding employees, compared to one-in-four firms letting workers go between March and May.
“It is important to remember that construction activity typically increases quite a bit between March 1 and the end of May as the weather improves and more work gets underway,” Simonson said. “Getting to March 1 levels is a sign of progress, but it doesn’t mean things are back to normal.”
Simonson added that the AGC survey and Procore’s data show the severe toll the pandemic took on the construction industry. For example, 61% of firms reported having had at least one project halted or canceled because of the pandemic. One in four firms noted that construction materials shortages, caused by lock downs and trade disruptions, are causing delays on current projects. Meanwhile, the Procore data found that smaller firms experienced more severe declines in construction activity during the pandemic than larger firms.
The survey also revealed that only 12% of firms plan to furlough or lay off staff over the next four weeks while 17% anticipated adding to their headcount during that time span. Even as more construction firms predict they will expand during the next several weeks, 42% said they don’t anticipate demand recovering to normal levels for at least four months, and most of those firms expect recovery will take longer than six months.
Simonson noted that construction firms are counting on additional federal help to improve demand for construction and make it easier to return people to their payrolls. They also hope that Congress will not extend the unemployment supplement that is currently set to expire at the end of July.
A webinar, hosted by the association to interpret survey results, also revealed the following highlights:
- Down from 48% on May 21, 44% of survey respondents reported being asked by an owner to halt current work.
- Fifty-seven percent of respondents are still experiencing project delays and disruptions, a trend that appears to be slowly but steadily declining. Those reporting personal protective equipment (PPE) shortages saw the greatest decrease, down to 10% from a high of 39% in April.
- The survey suggest suppliers are improving on deliveries, with 38% of responders reporting that suppliers sent notice deliveries to be late or canceled, down from a high of 49% on May 21.
- Approximately one-quarter of respondents feel business volume is back to normal, although 14% expect it to be another one to three months; 12% expect it to take four to six months; and 30% expect it to take over six months.
Procore also presented its data-driven findings regarding COVID-19 and construction activity during the webinar. The company tracked worker hour change in each state weekly, comparing its findings to a baseline of the week of March 1, before most states instituted coronavirus mandates. As expected, states with large numbers of COVID-19 cases and/or strict lockdown protocols (such as California, Washington and New York) experienced the most negative change in worker hours. Meanwhile, states lifting restrictions correlates with increases in worker hours. It also revealed data suggesting that small companies experienced the greatest decline in worker hours compared with medium- to large-sized companies. It also reports that as of May 31, small-, medium-, and large-sized companies have met or surpassed worker hour levels from March 1. Additionally, decline were similar in worker hours across non-infrastructure and infrastructure jobs, although worker hours for health care projects were affected less than energy and transportation project workers.
The association’s new survey results are based on responses from more than 630 firms collected between June 9 and 17. Procore’s data is based on the transactions logged via the company’s software by tens of thousands of construction firms across the country.
Click here for the association’s survey results and here for a video summary of the survey responses. Click here for Procore’s new construction data.
